Dallas Stars Blog

Dallas Stars sale update: Tom Gaglardi out of exclusive window but still favorite

In checking out a few things on the sale this weekend, it appears that Vancouver businessman Tom Gaglardi is no longer officially inside his “exclusive” negotiating window, but that he still is the favorite to put in the “stalking horse” bid on the Stars, and that the bid could come as soon as this week.

Gaglardi entered his 30-day exclusive window in late April, and the lenders and the NHL extended that window once, but they declined to do it a second time. However, for the purposes of the process, Gaglardi still is miles ahead of any other potential bidder. What the lenders, the NHL and the Stars would like is an official “signed purchase agreement,” that they can use either as the starting point in an auction or as a document that will be taken to a pre-packaged bankruptcy hearing.

Getting that purchase agreement is complicated for many reasons. On one hand, the bidder wants to put forth a price that will win him the team and that will hopefully not send the bidding process into an auction. But, he also doesn’t want a bid so high that it’s a bad deal. The lenders, meanwhile, want to agree to a price that would not be disappointing if it’s the sale price of the team. While the lenders are hoping for an auction, if they sign a purchase agreement, there is the chance nobody bids over that original price.

And that’s one of the reasons this is taking so long.

The other is that the sale price of the Stars will likely be between the $227 million that Forbes has them valued at (ranking 10th among 30 NHL teams) and about $250 million. Now, you can get to that figure in a lot of different ways _ including assuming debt, restructuring debt, and actual cash payments. So determining which bid is better than another is very difficult.

The Stars are a distressed property right now. One source said they lost $15 million last season and that was with player costs of $47 million and an average attendance of 15,073. This season, they are budgeted to have player costs around $52 million and could actually see attendance drop even further. They have very little momentum in ticket sales this summer, and have not been able to really put on much of a push.

Geoff Moore, the executive vice president of sales and marketing, has left the Stars to join the F1 racing venture Circuit of The Americas, and his position will not be filled until a new owner is named. The thinking is that new owner will probably want to name his own president and crew.

What’s more, the Mavericks and Rangers are hot tickets right now, and the available sports dollar is being spent in those areas. Yes, there is the chance either the NFL or the NBA might have a lockout, but that would only help the Stars down the line and probably only with small ticket packages or single game tickets.

If you have Mavericks or Cowboys season tickets, your sports dollar is probably tied up right now.

That’s a long-winded way of saying there is a very good chance this team will lose a lot of money next season, and every potential new owner is aware of that. Meanwhile, the lenders (led by Monarch Investments) are trying to basically flip a house for a profit. Many of these loans were purchased at discounted rates from people who originally invested in Hicks Sports Group but wanted to get out when bankruptcy appeared likely. That means that the lenders are in this for as much profit as they can get (as opposed to Atlanta or Tampa Bay owners who simply wanted out at any price). The lenders held onto the Stars last season and paid the bills as part of their strategy, so they want that money back.

The one deadline they face is that players start collecting paychecks in October, so if the lenders don’t want to sustain further losses next season, they need to sell the team by then.

That could set up an interesting poker game between the potential buyers and the lenders, with each side pondering when they are dealing from a position of strength.

All of that said…this is a solid hockey market. The AAC is a great building for producing revenue, there is probably a strong long-term contract out there with local cable (particularly if Comcast wants to try to get into the Dallas market to challenge FSSW as it did down in Houston), and there is a very good grassroots hockey program that has been installed over the past 18 years and is now producing NHL-level talent.

In other words, with the right ownership and a long-term plan, the Stars could be a heck of an investment.

And that’s why so many people are interested.

As we laid out in Saturday’s story, Tom Gaglardi is a huge hockey fan who missed out on buying the Vancouver Canucks in 2004 and is hoping this is a second chance to get in the league.His family owns Northland Properties, a hotel and restaurant chain in Western Canada, and he has been the lead dog in this ownership search since April. Documents filed in his bid list his worth at $2 billion, and he has some solid NHL connections through his majority ownership in the Kamloops Blazers with partners Darryl Sydor, Jarome Iginla, Mark Recchi and Shane Doan.

Expected to be eagerly awaiting Gaglardi’s bid are a couple of local groups. One is led by Billy Quinn, one of two managing partners of Irving-based Natural Gas Partners. While Quinn is the leader of this group, the two more recognizable names are former Stars president Jim Lites and current Mavericks owner Mark Cuban. Lites would be the front man and possibly a CEO with the team, while Cuban would provide significant capital in exchange for a piece of the AAC. Lites has dealt with Cuban for years on the AAC, so it’s expected they would form a strong partnership that would be good for both teams.

The other local group that has been in this from the start is led by Allen Americans owner Doug Miller. Miller’s son played hockey locally and the senior Miller has long funded youth hockey in the area, including the Dallas Stars select travel team. He is plugged into former NHL players Craig Ludwig and Steve Duchesne, and his company EXCO Resources has a long-standing relationship with T. Boone Pickens. It is not clear whether Pickens would be a big part of the investment group.

Coming into the picture more recently has been Chuck Greenberg, the man who led the Nolan Ryan Group through bankruptcy court last summer and secured the sale of the Rangers. A lawyer with a long background in sports, Greenberg has tons of NHL experience. He helped Mario Lemieux secure ownership of the Pittsburgh Penguins through bankruptcy back in 1999 and then helped broker the deals between the City of Pittsburgh and the Penguins that resulted in the building of the new Consol Energy Center that opened last season.

The other person interested in the Stars is Detroit businessman Christopher T. Charlton. He has been quietly studying the books in the background, and there really isn’t much known about how serious he is or whether he would need partners. Michigan is a huge hockey state, and he has long been a fan. Carolina Hurricanes owner Peter Karmanos has been based out of Detroit with Compuware for years, so this isn’t unusual.

Charlton runs the Charlton Group, which puts together businesses and solves problems. They have done a lot of work in the automotive industry.

The hope for the NHL and the Stars is that the lenders can agree with Gaglardi on a price, and then that price can be put in front of these others potential bidders. If that happens, the sale process can move forward. While the Rangers had their open auction in bankruptcy court, the NHL and the Stars would not mind having a lot the negotiation happen before the case goes to a pre-packaged bankruptcy hearing.

The feeling is the more that is controlled outside of a court, the better.

But this will have to go through a bankruptcy court at some time (probably the same Fort Worth courtroom the Rangers used last summer), so that the new owner can be protected from claims that might be issued by one of the 40 lenders who might not be compensated.

That’s where it stands right now. We’ll see if things finally get moving forward this week.